Homeowners in San Mateo who are looking for a way to offset the cost of their mortgage and other housing-related expenses may be tempted to rent out rooms in their homes. It seems like everyone is doing it; look at Airbnb or VRBO and you’ll see rooms for rent at prices that seem pretty profitable.

We don’t recommend it, and there are a number of reasons why this could be a bad idea for both owners and renters.

California Laws are Complex

All residential units that are rented to tenants in California are subject to the state’s habitability laws. While it may seem like you can skirt these laws and requirements since you’re maintaining occupancy of your property and simply providing a bedroom and maybe a bathroom, you still have to follow the laws. If you’re not an experienced landlord or real estate investor, it’s unlikely you understand the scope and the reach of landlord and tenant laws in California.

The person you’re renting a room to can sue you for damages if something goes wrong, and you will likely be left holding a lot of liability. You still have to provide explicit notice when you’re raising the rent or terminating the agreement. You have to respond to complaints of mold or noise or air conditioning problems and plumbing disasters.

Rental Income is Taxable

You’ll need to keep track of the money you earn on rent when you have a tenant or a lodger staying with you. That income will be taxable. While landlords who rent out entire properties can often take advantage of tax write-offs and depreciation, your situation is a little different when you’re only renting out a room and for a shorter period of time. Talk to your accounting professional or your CPA because the tax penalties might really cut into the money you earn in rent.

It’s Hard to Protect Your Tenant’s Privacy

A tenant is entitled to privacy, and that’s easy enough when you’re renting out an apartment. But when you’re renting out a room that’s part of your own home, respecting that privacy can be difficult. If you have children or pets, it may be especially difficult to keep them from wandering in and out of your tenant’s private space. If you provide a bathroom with the bedroom and your home’s main bathroom is occupied, you’ll have to avoid using your tenant’s bathroom. Setting boundaries for the use of the kitchen and the yard and the rest of the house can be difficult.

Collecting Rent and Enforcing Lease Terms

There will also be some difficulty in creating enforceable systems and procedures when you’re living under the same roof. If rent starts coming in late or not at all, what will you do? You’ll need to consider what steps you’ll take if the tenant refuses to leave or creates a mess in the room that attracts pests and rodents. Suppose you smell smoke coming from that bedroom even though you have a non-smoking home?

Legally and financially, renting out a room in your home can lead to trouble. Your tenant may have guests. He or she may violate HOA guidelines. You’re assuming a lot of risk and the rent you’re able to collect in exchange for those risks is rarely worth it.

If you’d like to talk more about the problems of renting out a room in your San Mateo home, we’d be happy to talk further about your specific situation. Contact us at Five Star Property Management for any of your San Mateo residential management questions.